Saab secures A26 completion order
By Renato Rios
Summary
- We assess that Saab's ~9.6 BNSEK order from the Swedish Defence Materiel Administration for the completion of two A26 submarines significantly enhances Kockums' medium to long-term backlog and revenue visibility.
- In our view, the order, although substantial relative to Kockums' current backlog and revenue, is a continuation of an existing program and aligns with our medium- and long-term growth expectations, thus leaving our estimates unchanged.
- The order underscores Saab's competitive position in underwater systems and strengthens its relationship with its key customer, while also supporting fixed-cost absorption and potentially moderating working capital swings.
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Saab announced that it has received an order of ~9.6 BNSEK from the Swedish Defence Materiel Administration (FMV). The order covers the final production phase of two previously contracted Blekinge-class A26 submarines, along with additional materials and services. This is meaningful for the Kockums division and further strengthens medium to long term backlog and revenue visibility. Since it is an extension to an existing program, we leave our estimates unchanged.
The order strengthens visibility for the division
The ~9.6 BNSEK order is substantial relative to Kockums entire backlog and revenue as of Q2’25 of ~15.6 BNSEK and ~8.8 BNSEK, respectively. Deliveries are concentrated in 2026-32, reinforcing backlog and revenue visibility for Kockums and the wider group. The scope covers materials and services for the completion phase of two Blekinge-class A26 submarines, a cornerstone program for Kockums.
Expected continuation of a long-term program
Although the order is large relative to the size of Kockums’ backlog and revenue, it is a follow-on order to an existing program and is already embedded in our medium- and long-term growth expectations for the division. The order deepens Saab’s relationship with its most important single customer and shows Saab’s competitiveness in underwater systems. From a financial standpoint, higher shipyard utilization supports fixed-cost absorption and margins, while prolonged milestone invoicing can help moderate working capital swings.
Important follow-on order, but no impact on our estimates
The order is large relative to the current size of Kockums, but it is spread over a long delivery period (2026-32), which limits the annual impact to the topline. If split evenly throughout the period, it would add ~1.4 BNSEK of revenue per year, which is already embedded in our expectations. Moreover, given the volatility typical of long-lead defense project businesses, the specific profitability impact remains uncertain. The order improves visibility and strengthens our conviction in our estimates, but it does not warrant any revisions at this stage.
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Saab is active in the defense and aerospace industry and focuses on the development, manufacture and distribution of defense and security systems. The company's products include fighter aircraft, radar and surveillance systems. The operations are global with a primary presence in Europe, North America and Asia. Saab was founded in 1937 and is headquartered in Stockholm.
Read more on company pageKey Estimate Figures15.09.
| 2024 | 25e | 26e | |
|---|---|---|---|
| Revenue | 63,751.0 | 75,439.4 | 88,134.4 |
| growth-% | 23.5 % | 18.3 % | 16.8 % |
| EBIT (adj.) | 5,604.0 | 7,113.6 | 8,350.0 |
| EBIT-% (adj.) | 8.8 % | 9.4 % | 9.5 % |
| EPS (adj.) | 7.85 | 10.56 | 11.95 |
| Dividend | 2.00 | 2.64 | 2.99 |
| Dividend % | 0.9 % | 0.5 % | 0.6 % |
| P/E (adj.) | 29.7 | 45.3 | 40.0 |
| EV/EBITDA | 14.6 | 25.2 | 22.0 |
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